Johannesburg – The rand retreated on Tuesday after data showed the US economy grew at its quickest pace in 11 years in the third quarter, giving a clear lift to the dollar versus emerging market currencies.

At 14:00 GMT, the rand was 0.50% weaker, fetching 11.62/$, after spending the session in a holding pattern in holiday-thinned trade.

The US Commerce Department revised its estimate of gross domestic product growth to a 5.0% annual pace from 3.9%, citing stronger consumer and business spending than it had previously factored in.

The outlook for the rand remains bleak as portfolio investments into the stocks and bonds of Africa’s most advanced economy flow outward.

“Deteriorating sentiment towards emerging markets through the course of 2014 has culminated in net outflows in portfolio investments amounting to some R10.9bn (year-to-date), the first time since 2008 that South Africa has experienced outflows,” ETM Analytics said in a note on Tuesday.

“Continued outflows could serve as a catalyst for the currency depreciative trend to extend,” it said.

The rand has shed 5% in December and over 25% in the last 12 months against the greenback, as a record 5-month labour stoppage in the platinum sector and tepid domestic growth have dented investor sentiment.

On the domestic debt front, the benchmark issue due in 2026 was unmoved at 8.00%.

– Reuters

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